Hawkish comments from Isabel Schnabel seal the deal on a July rate hike, probably by 25bp.
Germany’s nominal trade surplus plunged in March, due mainly to a collapse in exports to Russia.
Retail sales in the Eurozone are flatlining, due almost exclusively to soaring prices.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Higher prices are weighing on spending.
Melanie Debono (Senior Eurozone Economist)Eurozone
EZ unemployment was still falling by the end of Q1, defying the initial shock over the war in Ukraine.
The rate of improvement in the EZ labour market is now slowing, but it won’t stall.
Discretionary spending on goods in Germany is under pressure from higher inflation.
Claus Vistesen (Chief Eurozone Economist)Eurozone
The fall in the EZ budget deficit slowed in Q4, as governments ramped up fiscal support again.
We look for a smaller fall in the budget deficit this year than last, despite strong automatic stabilisers.
France’s electorate voted to maintain the status quo, but low turnout means Macron cannot rest easy yet.
Melanie Debono (Senior Eurozone Economist)Eurozone
EZ energy inflation likely will fall in April, and a cut in German fuel duties could mean a plunge.
Mr. Macron is pulling away in the polls ahead of Sunday's vote; his re-election looks like a good bet.
Business sentiment in France points to slowing GDP growth at the start of Q2, but not a collapse.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Business sentiment in retail sours, dragging on the headline.
Melanie Debono (Senior Eurozone Economist)Eurozone
The big four EZ governments already have spent 1-to-1.5% of GDP to combat high energy prices.
More will be needed; we think another 1% of GDP will be committed through Q2, at least.
Industrial production in Spain and retail sales in Italy advanced in February; good news for Q1 GDP.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Pedestrian; sales likely fell by around 0.7% in Q1.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Better than we expected, but still soft overall.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Spain's economy ended last year further below its pre-virus level than other major EZ economies...
- ...Now growth is slowing, and the outlook for Q2-Q4 is clouded by a hit to real incomes.
- The IFO was miserable in March, and real M1 growth points to an EZ PMI of 50 by summer.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
- Investor sentiment points to a fall in this week's eco- nomic surveys; brace for downside surprises.
- Near-real-time data signal little in the way of a direct hit to activity from the war in Ukraine, yet.
- The Eurozone's trade deficit narrowed slightly in January; is the deficit with China now shrinking?
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The EZ is now in stagflation; growth forecasts will come down, even as inflation projections rise.
- EZ energy inflation could rise above 40% in the next few months, lifting the headline HICP rate to 7%.
- Economic activity in Germany picked up in January, but growth through Q1 as a whole will be soft.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Consumption had a rough start to Q1, as restric- tions were tightened at the end of December...
- ...But things now are looking up and we think high inflation won’t derail the consumer recovery.
- Volatility is the name of the game in markets for now; a return to pre-Ukraine normality is a long way off.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: The readings in February and March will be much better.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The Swiss economy was resilient in Q4; GDP ended the year 2.0% above its pre-pandemic level.
- Growth will pick up, but inflation will remain low; the SNB will not hike rates with the ECB later this year.
- Spanish inflation jumped to an eye-watering 7.4% in February; energy prices remain a wild card.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The cat is out the bag; forecasters and markets now look for a significant shift in ECB policy this year...
- ...We concur, to a point; we think QE will end in October, before a 20bp deposit rate hike in January.
- German factory orders rebounded at the end of Q4, but industrial production in France stalled.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Ugly, and services spending certainly slumped further.
Melanie Debono (Senior Eurozone Economist)Eurozone
- German retail sales were hit hard by virus restrictions at the end of the fourth quarter…
- …But the labour market is going from strength to strength; unemployment will fall below 5% soon.
- Unemployment in the EZ hit a record low of 7% in December; it will fall much further this year.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Consumer confidence data in January point to a decent quarter for consumption in Q1...
- ...But other surveys and near-real-time data suggest otherwise. The good news is that Q2 will be better.
- Reactivation of the counter-cyclical capital buffer signals the return of "normality" for Swiss banks.
Melanie Debono (Senior Eurozone Economist)Eurozone
